The Role of Entrepreneurship and Business Ownership in Reducing Poverty

I recently attended a one-day symposium entitled “Confronting Concentrated Poverty: A Policy Forum” at the Federal Reserve Board here in DC.  I was disappointed but also excited at the close of the meeting.  The disappointment was due to the absence of small business and entrepreneurship in the discussion.  The excitement was generated from my deep faith in the role of entrepreneurship and small business in creating economic wellbeing in general, and bringing our nation out of the economic downturn in particular.

            I was pleased to see the Federal Reserve System collaborate with the Brookings Institution to examine the issue of concentrated poverty.  However, it would have been nice for the program to have investigated the importance of entrepreneurship and widespread business ownership in reducing poverty.

            Entrepreneurial energy is embodied in every human being (even if they are currently living in poverty) and that drives the development and growth of the economy, as discussed in a paper of mine.  Starting and operating a business is the best and most convenient way to utilize one’s entrepreneurial energy.  In addition, my research shows that a one percent increase in business density (number of businesses per unit of people) can raise personal income, household income, and tax revenue by more than one percent.

            Unleashing human entrepreneurial energy and channeling that energy toward business ownership is key to reducing poverty.  The U.S. Small Business Administration (SBA) has accumulated more than 50 years of experience and lessons in fostering entrepreneurship and business ownership.  It is my hope that SBA would reach out and join people in confronting poverty and revitalizing our nation’s economy, and continue to play an important role in improving people’s economic wellbeing by fostering entrepreneurship and business ownership.

— Ying Lowrey, Senior Economist



  1. Robert Fairlie says

    Business ownership has been used as a vehicle for upward economic mobility by many groups in the past. In recent research of mine I find that business owners of some minority groups experience faster earnings growth than wage and salary workers. I also find in a new book, Race and Entrepreneurial Success (MIT Press) that if we could only increase African-American business ownership rates and business incomes to white levels we could reduce overall inequality in the U.S. by 20%. There is no doubt that inequality in the ownership of small businesses contributes to poverty and inequality in the United States. It’s too bad these points were not made at the recent Fed conference on reducing poverty.

  2. kerja keras says

    good point. trying to escape from poverty in my contry, indonesia..regard

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